FedEx Buying American Freightways

Harrison-based American Freightways is becoming part of FedEx, years since Little Rock turned down the opportunity to keep FedEx in Arkansas.

FedEx Corp. President and CEO Frederick W. Smith could not get Little Rock officials to expand the city’s airport, and the result has been that FedEx has become almost as synonymous with Memphis as Elvis, Beale Street and barbecue.

Ironically, FedEx now owns one of Arkansas’ best business success stories in the Harrison-based American Freightways Corp. FedEx and AF jointly agreed Nov. 13 for FedEx to purchase the scheduled, for-hire carrier of less-than-truckload (LTL) regional freight carrier AF for $28.13 per share, or about $1.2 billion. That figure includes about $250,000 of assumed debt, payable in cash and FedEx stock. FedEx paid 61 percent premium over the $17.50 stock price at the close of the market Nov. 10, the last business day before the acquisition.

AF is a scheduled, for-hire carrier of less-than-truckload (LTL) commodities.

On Nov. 13, the day of the announcement, AF’s already strong stock price of $17.50 soared to $27.75 per share. AF’s 52-week low was $10.75 per share. FedEx also enjoyed a rise in stock price, from $45.50 per share when the announcement was made to as high as $49.25 within the next week.

“This merger was a natural fit and came at an opportune time for both companies,” said Tom Garrison, president and CEO of AF. “It is because of our success that FedEx purchased us, that along with the synergies our companies create together.

“FedEx would not purchase a company that did not bring a great deal to the table. AF brought $1.1 billion in revenues from 1999, and that has since only been growing.

“AF and FedEx’s strategy is to compete collectively and operate independently.”

Sheridan Garrison, chairman of AF, founded Arkansas Freightways in 1982 and took it public in 1989. It became American Freightways in 1993. Sheridan Garrison had grown up in the trucking business as his father, Ben, owned Garrison Motor Freight in Harrison. And aside from son Tom, son Will is corporate vice president, secretary, treasurer and chief operating officer; son Daniel is a senior account manager for AF out of Fort Worth, Texas; daughter Tonya Maxey is director of marketing; and stepson Travis Ruff is director of special projects.

“While it was somewhat emotional for everyone here, this is a great time for AF and every associate who has worked so diligently to ensure its growth and success,” said Tom Garrison. “The FedEx acquisition means one thing fundamentally … that we will continue to grow and expand as a regional carrier group serving 48 states with our sister carrier, Viking Freight, in the West, only operating together with much deeper pockets and owned by a company that has been selected among Fortune Magazine’s best places to work in America.”

Tom Garrison said that both Harrison and AF employees are safe with the merger.

AF serves 40 contiguous states. Through partnerships, AF also serves Alaska, Canada, Caribbean islands, Central America, Hawaii, Mexico, Puerto Rico and South America. It employs 17,200 associates and has a network of 265 customer centers. The company has about 9,000 drivers.

“[The general offices] will remain in Harrison,” Garrison said. “Harrison’s future is secure with AF. In fact, the company is expected to continue and enhance its historic growth pattern right on schedule. There are no changes planned or expected for any AF associates.”

AF recently completed a 90,000-SF wing, a 5,000-SF credit union, a 2,700-SF print shop, a new parking lot, two retention ponds and additional landscaping to the existing 161,000-SF facilities on 51 acres.

Harrison is not the most accessible destination in Arkansas, since it is two and a half hours northwest of Little Rock, an hour and a half east of Fayetteville, and an hour and a half south of Springfield, Mo.

But Sheridan Garrison said that with today’s technology, “you could run the company from the North Pole.”

Harrison’s Boone County Regional Airport will most likely benefit from the FedEx purchase of AF

Although Little Rock refused to expand Adams Field in the 1970s to accommodate FedEx, Harrison’s Boone County Regional Airport will most likely benefit from the FedEx purchase of AF.

“There’s always nervousness when one of your companies is doing something different,” said Layne Wheeler, president of the Harrison Chamber of Commerce. “But when you look at the deal and what FedEx has to offer to the community, we believe it’s a great fit. And we know that Sheridan has always kept the interest of this community at heart. It’s where his family lives. He is making decisions that will be good for Harrison as well.

“There was also a lot of excitement because people believe that now maybe our airport will be better utilized.”

Boone County Regional, which was already undergoing renovation to expand the runway, has the fourth-longest runway in Arkansas.

AF hit a then-peak of $24.75 per share in September of 1994, but the company struggled the next five years by being what Sheridan Garrison called as being too “overly aggressive in its expansion.”

“We hit the wall in 1995,” Sheridan Garrison said.

That, however, turned out to be a blessing in disguise, he said, since the company was forced to tear down each department, piece by piece, and put it back together rather than “just patching it up.”

“We waited for five years. Then things just finally came together,” he said.

On Oct. 18, Tom Garrison owned 246,204 shares of AF common stock worth $4.3 million and had an additional 3,000 shares of indirect stock worth $52,000.

With annual revenues of $19 billion, FedEx is the premier global provider of transportation, logistics, e-commerce and supply chain management services.